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whether petitioner incurred these expenses as an employee or
shareholder of Craft-Barnett. If petitioner incurred these
expenses to protect his equity interest in Craft-Barnett, the
expenses would be capitalized and would not be deductible by
petitioner. Section 162(a) allows a deduction for all ordinary
and necessary expenses incurred in carrying on a trade or
business. The performance of services as an employee constitutes
a trade or business. O'Malley v. Commissioner, 91 T.C. 352, 363-
364 (1988). An ordinary expense is one that is common and
acceptable in the particular business. Welch v. Helvering, supra
at 113-114. The principal function of the word “ordinary” in
section 162(a) is to clarify the distinction between expenses
which are currently deductible and expenses which are capital in
nature. Commissioner v. Tellier, 383 U.S. 687, 689 (1966); Noyce
v. Commissioner, supra at 686. A necessary expense is an expense
that is appropriate and helpful in carrying on the trade or
business. Heineman v. Commissioner, 82 T.C. 538, 543 (1984). As
petitioner’s expenses were not incurred in the acquisition or
enhancement of a capital asset but in the conduct of his duties
as an employee of Craft-Barnett, the expenses are ordinary. The
expenses incurred by petitioner were necessary to fulfill his
duties as vice president of Craft-Barnett.
Therefore, we conclude that the expenditures attributable to
Craft-Barnett are deductible by petitioner as ordinary and
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